Forget Bubble, Try Boom
A “bubble” is a self-perpetuating economic state based on unrealised earnings. The web 1.0 bubble that ended in 2000 was a scary mix of stock market hype and underperforming companies that resulted in a disastrous tech crash.
Now geeks are back and “web 2.0” has been a rallying cry for the real value of web innovation and technology to come out of hiding. But not without fear; the previous bubble bursting crushed the hearts of millions of dreaming geeks around the world, and did severe financial harm to many for years after. So there’s a natural trepedation, and sometimes jealousy, that pushes forward the idea that we’re heading in the same direction again. It’s ridiculous.
This time around you can’t just yell bubble and watch the sky fall. Nobody really cares. Why? Because there is no pack of lemmings to run screaming off the cliff, aka the market. The only bubble, if you could call it that, is the level of VC investment being put at risk, and that’s a) low and b) coming from people who manage risk for a living.
In bubble 1.o investor’s money was what was being spent. That’s hollow. It’s a false economy, and a crash is inevitable. Now we have two big differences: the level of equity being invested is far lower (if you include IPO raising), and the actual revenue being earned in internet advertising (let alone other service revenues) is substantially higher, and it’s not market money.
So investments are significantly down, yet earnings are skyrocketing. $4b in the last quarter! That’ll be $22b-$30b next year. That’s bigger than the Gaming and Movies markets combined. And I don’t see any reason for growth to slow prior to reaching 40%-50% of the global ad market ($40b-$60b).
Get a grip people. Know a good thing when you see it. We all knew how big and amazing the internet would be. It just took 5 years longer to get the job done.